RJM & Company advises EGA in its acquisition of a majority stake in US recycling firm Spectro Alloys

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Aug 22, 2024, 08:51 ET

KANSAS CITY, Mo., Aug. 22, 2024 /PRNewswire/ -- Emirates Global Aluminium ("EGA"), the largest industrial company in the United Arab Emirates outside oil and gas and the biggest 'premium aluminium' producer in the world, today announced its intention to acquire a majority stake in American aluminium recycling firm Spectro Alloys Corporation ("Spectro Alloys").

The acquisition, which is subject to obtaining regulatory approvals, will accelerate EGA's global expansion into aluminium recycling and expand EGA's business in the United States.

Spectro Alloys is a leading secondary foundry alloy producer in the United States, founded in 1973, and based in Rosemount, Minnesota. The company has a production capacity of approximately 110 thousand tonnes per year of aluminium ingots, with a carbon intensity of less than one tonne of CO2 equivalent per tonne of aluminium produced.

Earlier this year, Spectro Alloys broke ground on an expansion project at its Rosemount site that will add approximately 55 thousand tonnes per year of secondary billet production capacity in the first phase, which is expected to be completed in 2025.

EGA intends to acquire 80 percent of Spectro Alloys. The current owner-managers will retain a 20 percent shareholding. EGA and Spectro Alloys have signed an equity purchase agreement, and the transaction is expected to close during the third quarter of 2024.

In May, EGA acquired European specialty foundry Leichtmetall, and late last year EGA began construction of the UAE's largest aluminium recycling plant.

Abdulnasser Bin Kalban, Chief Executive Officer of Emirates Global Aluminium, said: "EGA is the biggest 'premium aluminium' producer in the world and our goal is to grow further in both primary and recycled aluminium to meet the growing global demand for a metal which is essential for our world's sustainable future. In the United States, which is already one of EGA's largest global markets, this acquisition will significantly grow our business and expand our offering to customers with domestic production. Spectro Alloys has a strong and highly experienced team which is already implementing ambitious expansion plans and will be a strong platform for the further development of an EGA recycling business in the United States. I look forward to working with Spectro Alloys' team."

Luke Palen, President of Spectro Alloys, said: "We have grown Spectro Alloys over the last five decades into one of the United States' top aluminium recycling companies. By becoming part of EGA, the largest 'premium aluminium' producer in the world, we will unlock the next stage of our development in the fast-growing aluminum recycling industry. In the near term, this will allow us to accelerate our ongoing expansion project. In the long term, this is a big win for the future of aluminum recycling in the United States."

The United States currently consumes some 4.9 million tonnes of recycled aluminium annually, accounting for half of all aluminium demand in the country and making the United States the second largest recycled aluminium market in the world. Demand for recycled aluminium in the United States is expected to reach some 7.6 million tonnes per year by 2033, according to CRU, an independent business intelligence organisation.

EGA sold approximately 550 thousand tonnes of primary aluminium in the United States in 2023.

Spectro Alloys currently supplies more than 125 customers, primarily in the Upper Midwest and Texas. Almost half of Spectro Alloys' production is used in the automotive sector. Spectro Alloys sells to semi-fabricators, who in turn supply blue-chip end-user companies. Other important sectors for Spectro Alloys include small engine manufacturing, construction, and recreational vehicles.

Spectro Alloys sources aluminium scrap from more than 250 scrap suppliers in the region and uses advanced sorting and analysis technology to produce the wide variety of alloys required by the company's customers.

Market analysts expect global demand for recycled aluminium to double by 2040. Recycled aluminium is expected to account for approximately 60 percent of the growth in global aluminium supply between now and 2030, and approximately 70 percent of supply growth between 2030 and 2040.

RJM & Company served as exclusive financial advisor and King & Spalding served as legal counsel to EGA.

Financial terms of the transaction were not disclosed.

Contacts at RJM:

Rick Moyer
Managing Partner
[email protected]
+1 816-608-0517

Robert Kellogg
Vice President
[email protected]
+1 816-608-0943

Matt Clemons
Vice President
[email protected]
+1 816-516-8827

About EGA

Since 1975, when it was founded as Dubai Aluminium by His Highness Sheikh Rashid bin Saeed Al Maktoum, Emirates Global Aluminium has been innovating aluminium to make modern life possible.

EGA was formed in 2014 through the merger of Dubai Aluminium and Emirates Aluminium.

Today EGA is the world's biggest 'premium aluminium' producer and the largest industrial company in the United Arab Emirates outside the oil and gas industry.

EGA is equally-owned by Mubadala Investment Company of Abu Dhabi and the Investment Corporation of Dubai. It is the largest company jointly owned by the two Emirates.

EGA is an integrated aluminium producer, with operations from bauxite mining to the production of cast primary aluminium and recycling. EGA operates aluminium smelters in Jebel Ali and Al Taweelah, an alumina refinery in Al Taweelah, a bauxite mine and associated export facilities in the Republic of Guinea, and speciality foundry in high strength recycled aluminium in Germany.

EGA has more than 400 customers in over 50 countries. In 2023, value-added products accounted for 76 percent of EGA's cast metal sales.

EGA's aluminium is primarily used in the construction, automotive, packaging, aerospace and electronics industries.

As a corporate citizen of the UAE, EGA aspires in all its operations to be measured amongst the world's leading metals and mining companies in meeting its environmental and social responsibilities.

Learn more at www.ega.ae

About Spectro Alloys

Spectro Alloys operates one of the highest efficiency aluminum recycling plants in the United States. Since 1973, Spectro Alloys has been providing high-quality recycled aluminum alloys to regional die casters and foundries, where it is made into new products for the automotive, power sports, home, turf and snow maintenance, and other industries. Recycling at Spectro Alloys involves shredding, sorting and processing aluminum with the most advanced technology used in the industry today. Aluminum recycling at Spectro generates more than 95 percent in CO2 and energy savings compared to creating new aluminum. Spectro's direct CO2 savings is equivalent to removing more than 80,000 cars from the road, and Spectro's direct energy savings could power more than 200,000 homes. Learn more at SpectroAlloys.com

About RJM & Company

RJM & Company is a boutique M&A and capital markets advisory investment bank. The firm provides boards and management teams of public and private companies with independent advice and expertise in a variety of sectors including road, rail and marine transportation, infrastructure, chemicals, energy, metals and mining, manufacturing, building materials and other areas of the industrial complex. RJM advises clients on all aspects of transactions including timing, structure, and pricing. RJM originates out of market opportunities as well as leads or supports negotiation and execution of transactions already under evaluation.

SOURCE RJM & Company